Downers

The Bottom Line

Many employees say the pros outweigh the cons, but some worry about working at an oil company that stresses refining over integrated services.

About Valero Energy Corporation

Valero Energy was not only named after a mission (the Mission
San Antonio de Valero), it is on a mission to be the largest
independent refiner in the US. Valero churns out about 3 million
barrels per day, refining low-cost residual oil and heavy crude
into cleaner-burning, higher-margin products, including low-sulfur
diesels. It operates 15 refineries in the US, Canada, the UK, and
Aruba. It also has 11 ethanol plants with a combined production
capacity of about 1.3 billion gallons per year. Once a more
diversified company, Valero has exited the retail business in order
to focus on its oil refining and ethanol operations.

Geographic Reach

Valero has refining and wholesale operations in Aruba, Canada,
Ireland, the UK, and the US. In 2015 the US accounted for 68% of
the company's total revenues; Canada, 8%; UK and Ireland, 13%; and
other countries, 11%.

Operations

The company operates two business segments: Refining (96% of
Valero's 2015 revenues -- refining operations, wholesale marketing,
product supply and distribution, and transportation); and Ethanol
(sales of internally produced ethanol and distillers grains in the
US).

Sales and Marketing

The company markets branded and unbranded refined products on a
wholesale basis through an extensive bulk and rack marketing
network. Valero sells refined products through 5,700 branded sites
in the US, 1,000 branded sites in the UK and Ireland, and 800
branded sites in Canada. The company sells ethanol to large
customers (primarily refiners and gasoline blenders) under term and
spot contracts, and in bulk markets such as New York, Chicago, the
US Gulf Coast, Florida, and the US West Coast.

Valero markets branded and unbranded refined products on a
wholesale basis through an extensive rack marketing network. The
principal purchasers of refined products from terminal truck racks
are wholesalers, distributors, retailers, and truck-delivered end
users throughout the US, Canada, the UK, and Ireland.

The company delivers its product via tanker, pipeline, trucks, and
rail cars.

Financial Performance

In 2015 Valero's net revenues decreased by 33% due to lower
refining and ethanol segment sales.

In 2015 the company's net income increased by 10% due to a
decrease in the cost of sales (excluding the lower of cost or
market inventory valuation adjustment).

Cash from operating activities increased by 32% due to higher net
income and changes in current assets and current liabilities.

Strategy

Valero is pursuing a long-term strategy of ramping up its
profitable businesses in the US while selling about a third of its
high-cost North American refineries and other non-core US
assets, in order to explore more cost-efficient projects
elsewhere in the US and in faster-growing markets in Europe, the
Middle East, and Asia.

In 2016, the company expected to spend $2.6 billion on
capital investments, including capital expenditures, deferred
turnaround and catalyst costs, and joint venture investments. This
consists of $1.6 billion for stay-in-business capital and $1
billion for growth strategies, including its continued investment
in Diamond Pipeline.

Hedging its bets, Valero has also moved into the alternative
fuel business. Given that ethanol is a requirement in many of the
gasoline fuel mixes it sells, the company decided
that it could cut costs by owning ethanol plants, rather than
buying ethanol wholesale.

In 2014 subsidiary Valero Renewable Fuels Company, LLC,
purchased a corn ethanol plant in Mount Vernon, Indiana from
Aventine Renewable Energy-Mt. Vernon, LLC with an annual production
capacity of 110 million gallons. The Mount Vernon plant is the 11th
corn ethanol plant in Valero Renewables' system and its second in
Indiana, and gives Valero more than 1.3 billion gallons per year in
ethanol production.